Paying the bills with a small business(Read article summary)
Finding a market niche is not always enough to build a sustainable business, Cornwall writes. Adjustments in the business model are often necessary to be able to grow a business to the point that it can provide a consistent paycheck.
The number one goal for new entrepreneurs is to grow their businesses to the point where they can finally get paid and begin to make a living from their new venture. Tyler Barstow and Belmont alumnus Matt Fiedler, co-founders of Vinyl Me, Please, are trying to adapt their business model to reach that important goal.
Vinyl Me, Please is seeking to tap into the renewed interest in vinyl records. According to Nielsen SoundScan, the demand for vinyl records has grown for the past five years. There were 4.6 million newly pressed vinyl records sold in 2012, which is a 17.7 percent increase from the previous year.
Music enthusiasts love vinyl records for the warmth and depth of their sound.
The niche that Vinyl Me, Please fills is to bring new and interesting music to a new generation of vinyl record enthusiasts. Each month the subscribers to Vinyl Me, Please are sent a brand new, hand-wrapped vinyl album from a relatively undiscovered artist.
In addition to the monthly vinyl record, subscribers are assigned a personal music consultant who gets to know their musical tastes and preferences. Every month the consultant creates a personalized playlist specific to each subscriber.
Vinyl Me, Please brings together in one service what today’s young music enthusiasts want. Their customers love the sound of vinyl, they like to interact on social media with friends about new music to try, and they like the surprise factor they get from services like Pandora.
The challenge with their business model is that although they have identified what their market wants, their model has proven to be a challenge to scale to a large enough size to pay the founders a consistent salary. They need to grow to at least 700 subscribers to reach this important milestone.
“The biggest challenge we face is keeping the personal touch,” says Fiedler. “We think this is what makes the experience unique to a lot of people and is something we’re going to have to fight through in order to achieve true scalability. We need to find a way to maintain a personal touch but be able to bring a massive number of customers into the system without it straining the resources of the company.”
They have recognized that it will not be possible to continue to hand wrap the albums as the business grows. They also are looking at ways to make the personal consulting more efficient.
“We have plans to set up an internal database that allows us to categorize and sort music to create a more efficient process around creating playlists,” explains Fiedler. “We are also looking at rolling out a playlist-only offering that will help us capture more users and, at the same time, start paying our consultants without dipping into the revenue that comes in from standard, full-membership subscribers.”
The entrepreneurs behind Vinyl Me, Please recognize that just finding a market niche is not always enough to build a sustainable business. Adjustments in the business model are often necessary to be able to grow a business to the point that it can provide a consistent paycheck.